As home prices soar in Orange County and elsewhere, the chief economist for Trulia has launched a "Bubble watch" feature on the national real estate website, to explore whether various markets around the U.S. are experiencing overblown home prices.

Orange County home prices have soared by double digits this year. Experts disagree on whether the price gains simply represent a rebound, or whether prices and other factors mark the beginnings of another housing bubble.

Flipping properties is nothing but speculator driven inflation of property values. Cities love it because they can use it to drive up evaluations for property taxes. New homeowner is stuck holding the bag.

House prices here in Phoenix are near pre-bust. In a much softer job market. Granted there is some foreign investment, but I am not sure how much. I came back to the Valley last year after three years away and bought. My house has "appreciated" over 60k in that year. It can't hold.

I should add, also, after the bust--you couldn't give away one of these giant McMansions they build here. But, now they are building and selling them like hotcakes.They are ridiculous. One model in my neighborhood has 5,000 square ft. of which the upstairs consists of a couple of small rooms and a GIANT, GIANT big loft room--the size of three normal, large rooms. There is no way the average middle class family can afford to cool that for six months a year. I predict all those McMansions will once again be bought for the same price as the one story more modest homes. I swear people don't learn.

6
posted on 06/02/2013 10:34:32 AM PDT
by riri
(Plannedopolis-look it up. It's how the elites plan for US to live.)

Over in Palm Springs, they have SoCal Edison and $1000 monthly electic bills are not uncommon. We here in the east valley have another provider with much better rates, but $300-$400 per month isn't unusual.

It was 111 degrees yesterday, and when I looked at 10am, we'd hit 100............and our A/C took a crapper last night - weekend, of course.

Like the one I described? Easily. Then add in the pool pump which runs 8-12 hours a day in the hot months, you are easily up to $700-$900 a month. I have heard stories over over $1,000 a month. Plus an upstairs gets so much hotter and erlier. With a one story, I can go to about mid May without air unless it's unusually hot ( I like the heat though and it takes a lot to make me uncomfortable). The two stories need air many more months a year.

I have about 2600 sq ft on one floor and with the pool pump, even my high bills in July and August will get to the near $400 mark. (and increasing with rate hikes all the time). But then, in the cool months, they are next to nothing.

12
posted on 06/02/2013 11:05:57 AM PDT
by riri
(Plannedopolis-look it up. It's how the elites plan for US to live.)

Yeah, I had a friend who lived in the inland empire, who’s summer electric bills were about $450. per month...And it was a single story house...Between the mortgage, utilities, food prices, insurance, gas etc....

Well they wound up divorced after their 5th year in the house and after his hours were cut. They finally sold it just before it foreclosed, and basically broke even...He estimated they put about 10k in needed improvements to the home...So in reality, they took the big hit...

This story has been repeated millions of times in just the past 8 years or so....

14
posted on 06/02/2013 11:27:35 AM PDT
by dragnet2
(Diversion and evasion are tools of deceit)

....insult to injury, wifey’s in “prep mode” today for a procedure tomorrow....the one that requires drinking a gallon of Go-Lightly (and don’t wander far from the loo), so we can’t even check into the local motel.

I live in OC, as I type this, new neighbors are moving in, across the street. The house was on the market for eight days, listed at $440K, final selling price $490K. The place down the street just listed, per Zillow, value increased $38K in 30 days. My own humble abode has “only” increased by $13K in 30 days, not that it matters too much, I am not going anywhere. I definitely have that Monopoly money sense, like in 2007, the only good thing I have heard is that lenders are not covering these huge spikes, the buyer has to come up with cash to cover the difference. Not sure how true it is, but one neighbor I trust, and knows the industry, confirmed this more conservative practice to me, last week, FWIW. Thanks.

This flipping of homes is ultimately toxic to the viability of communities by driving the price of housing to the point that it squeezes others out of the home market, causes others to overextend themselves financially, or squeezes money out of other markets and causes a lag on economic growth.

When you’re looking at housing costs ideally not exceeding 25% of take-home pay, I’m amazed to see so many communities in California where the average price of real estate for a family of 4 seems to hover at least 450k. Is there average take-home pay in these areas 120k per year? Hardly.

(a) investors bought a large % of the foreclosed homes and homes that might have been foreclosed on if the owners did not sell, and

(b) they held onto a large % of those homes they bought,

(c) and after fixing/cleaning them up, or not, they have rented, not sold, many of them, which has kept a lot of them off the market for regular primary residence home buyers, and

(d) even in a down market, when there are still some buyers but fewer than before, low supply of “for sale” homes, even an artificially created low supply, can mean some buyers will pay a premium to buy a home.

In one case I know the details of, in a San Bernardino County suburb, a 1955-built 3-bedroom 1400sf 2car detached garage house (a) had an outrageous [I know the exact area very well] market value of $378,000 at the top of its price bubble in 2006; (b) foreclosed to the lender at $274,000 in May 2011, (c) sold for $95,0000 in Feb 2012 [the owner had been asking $114,900 since Dec 2011 after 4 months of not getting $144,900, (d) sold for $188,000 in July 2012, (d) is valued by zillow for $181,000 today, and (e) is up for sale now for $245,000.

With 12% unemployment in San Bernardino County, I question that the job/employment base there can support that kind of housing price increase, in that market. Yes $245,000 is still below the outrageous market value it had in 2006 and below what it foreclosed at in 2011, but in my view, knowing the area, neither of those values were justified, both were somewhere in the midst of the bubble prices in that area.

I am hearing similar reports of new really wide upswings in home prices from a number of S.California sources. I tell them what I know about the employment data and ask them where are the new jobs. They tell me they don’t know.

It all sounds like investor held inventory has been rented, kept off the market a lot, shrunk the for-sale supply, boosting for-sale prices even in this down market.

But, after their trickle sell-off of their rented inventory, at shrunken for-sale-supply price premiums, the econ growth, job growth and job stability data might not support what these houses are getting now, putting recent buyers underwater in a couple years in some places.

I guess on the theory of sell high and buy low one could only recommend to people in the midst of these local bubbles, if they desire to sell and if they can get a really good profit, go ahead and sell, but buy the replacement home in a different area that is not now seeing these price upswings. If that is not possible due to job & family circumstances (can’t leave the area), I’d be cautious about selling now and buying something else in the same area.

Rentals drive prices RE prices...When the investors find half their homes are trashed and or found themselves with tenants who can’t be evicted for a year at a time...Well the naive foreign investors get very PO’d.

23
posted on 06/02/2013 3:33:09 PM PDT
by dragnet2
(Diversion and evasion are tools of deceit)

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